Arculus Funds Management 
In the absence of any significant economic data the market last week was consumed by Trump economic policy conspiracies. This led the equity market to fresh highs and to a significant surge in bond yields. It is hard to fathom the markets economic logic with its Trump economic policy assumptions. He won’t get anything done … Read more
Last week’s Australian Labour force data was much stronger than expected but that did not stop some bank economists trying to downplay it by pointing out that a great deal of the employment increase came from government related services (Education, Health and Administration). We view these jobs as a lot more permanent than private sector … Read more
The following Chanticleer article in last weeks AFR was typically light on detail (Why Ray Dalio and Jamie Demon are looking past interest rate cuts to the ‘ticking time bomb’ of debt, inflation and geopolitics (afr.com)), but if we accept the headlines are true (just for a moment), these are: US Economy is in relatively … Read more
The huge 254,000 increase (remember that on average a 150,000 monthly increase is normal in an economic recovery period) in non-farm payrolls on Friday night was a shock – even for our expectations. The market was expecting a 140,000 increase and no revisions to July or August. Not only was the September reading very strong … Read more
Australia’s only PMI reading is the S&P PMI badged as the Judo Bank PMI. We have found both the S&P and ISM PMI readings have given false signals since the pandemic lockdowns. One of the reasons that the PMI data has been giving false signals, notably in mid-2022 when it signalled a sharp economic contraction … Read more
Hybrids – Yields set to fall The recent APRA paper proposing changes to a bank’s capital structure will reduce the requirement of banks to issue hybrids (Capital Notes or AT1 capital). Whilst there is much water to flow under the bridge on how this plays out, the current crop of listed hybrids will be well … Read more
The way the markets reacted to the US data releases last week was a little odd. Perhaps the Wall Street Junkies are all blinded by the impending Federal Reserve interest rate decision where they now expect a 50bps cut and if they don’t get it they will not be happy because it will be sobering? … Read more
It should not go un-noticed that there was quite a lot of volatility in the currency markets on Friday. We may be getting an early warning signal of another bout of Yen Carry Trade unwinding-risk off trading this week. The following exchange rate charts show that the Yen is reaching towards the same levels that … Read more
A few weeks ago, after the attempted Trump assassination, we began collecting our thoughts on the implications of a Trump Presidential win and/or the Republicans gaining control of the Senate (they already have Congress). Although there are few details yet, he has promised “lower taxes, bigger pay checks, and more jobs for American workers” by … Read more
There were 3 surprises last week: ISM manufacturing PMI moving above 50. The 308,000 increase in non-farm payrolls in March. The equity market’s reaction to the non-farm payrolls data. Firstly, the US ISM manufacturing PMI was not only much higher at 50.3, than the 48.3 expected for March, it was the first reading above 50 … Read more